These changes aim to simplify the process of registering tax invoices, increase thresholds for “unconditional registration,” and reduce bureaucratic hurdles, especially for businesses in front-line or war-threatened regions. The STS hopes to minimize unnecessary blocking of invoices while maintaining rigorous checks against tax evasion schemes.
1. Background and Proposed Regulatory Update
- Current Framework: Governed primarily by Resolution No. 1165 of the Cabinet of Ministers, which outlines how invoices are monitored, blocked, or reviewed.
- New Amendments: The STS submitted proposals to the Ministry of Finance, which, if adopted, will require government approval before implementation.
Ruslan Kravchenko’s Statement
Ruslan Kravchenko, head of the State Tax Service, emphasized these amendments would “reduce the number of blocked invoices” and enable “simpler work for businesses that operate transparently,” while continuing to deter schemes and tax evasion.
2. Key Changes in Detail
-
Increased Limits for Unconditional Registration
- Thresholds Raised:
- Total supply volume for unconditional registration: from the current limit (not specified in the official statement) to UAH 1 million.
- Single counterparty limit: from the current UAH 100,000 to UAH 100,000 (as reported; needs clarity if it’s the same or changed).
- Transactions up to UAH 10,000 (previously UAH 5,000) qualify for immediate registration, with the monthly cap for these small transactions increased from UAH 500,000 to UAH 3 million.
- Thresholds Raised:
-
Simplified Checks in Front-Line Areas
- Relaxed Monitoring: Entrepreneurs in zones threatened by potential hostilities but not under active fighting will enjoy fewer documentary hurdles, making tax invoice approval faster.
-
Streamlined Bureaucracy for “Non-Risky” Taxpayers
- Automatic Registration: Once a taxpayer is removed from the “risky” category and has a positive tax history, their invoices will qualify for automatic registration without further submission of repeated data.
-
Enhanced Automatic Data Table Recognition
- Taxpayer Tables: The STS will automatically accept certain standard data tables, limiting the number of supporting documents businesses need to provide repeatedly.
-
Revised Positive Tax History Indicators
- Higher Volume Threshold: The limit for “positive” history is raised from UAH 1 million to UAH 3 million (total monthly supply volume), and from UAH 100,000 to UAH 500,000 per individual counterparty.
- Manager Position Limit: The condition that a manager can only hold a similar role for 3 payers is changed to 5.
-
Adjustment of the Risk Criterion for Certain Returns
- Longer Window: An adjustment calculation for returning goods from a non-VAT payer within 90 days (instead of the current 30) will not be deemed risky, reducing the likelihood of automatic blocking.
3. Rationale and Expected Impact
-
Reduction of Blocks
- The STS foresees fewer unnecessary invoice suspensions—promoting a more efficient and “business-friendly” environment.
-
Support for War-Affected Enterprises
- Tailored relief for entrepreneurs in front-line regions alleviates administrative burdens, acknowledging the challenges of operating under conflict conditions.
-
Focus on Compliance
- Kravchenko reiterated that legitimate businesses will benefit from these reforms, while the system continues to target tax-avoidance tactics.
-
Clear Path to Implementation
- The changes await the Ministry of Finance’s review and then official Cabinet approval for adoption into law.
4. Ongoing Initiatives and Consultation
- Regional Advisory Centers:
- In response to business complaints, the STS has established 29 centers where tax officials help resolve issues about suspended invoices or “risky” enterprise status.
- Head of STS Engagement:
- Kravchenko actively meets entrepreneurs nationwide; nearly every second query pertains to improvements in the invoice suspension process.
Conclusion
The State Tax Service’s proposed amendments to the tax invoice monitoring system (SMKOR) aim to modernize oversight, ease operational burdens for compliant businesses, and tackle persistent tax avoidance schemes. The potential acceptance of these six key changes could streamline procedures, decrease invoice block rates, and bolster confidence in Ukraine’s tax system—particularly vital as the country remains focused on supporting businesses amid conflict.
